Can UK soften tariff blow?

INDIA MUST MOVE QUICKLY ON DOMESTIC POLICY SUPPORT & SYSTEMIC REFORMS TO REAP BENEFITS

- ASHOK GULATI SULAKSHANA RAO

UK PRIME MINISTER Keir Starmer’s visit to India with a strong business contingent of 125 people augurs well for India.

This is especially so when India is facing the tariff blow of 50% from US President Donald Trump. This is not only good diplomacy but also good business. Starmer himself said that the India-UK trade partnership, Comprehensive Economic and Trade Agreement (CETA), is a “launchpad for growth”. Both countries are looking to deepen their partnership in various sectors ranging from defence and education to critical minerals. Let us try to dig deeper and see how India can gain from this, and where it should focus as far as trade between the two countries is concerned.

CETA (signed on July 24) is significant in both depth and breadth. It covers more than 99% of tariff lines in industrial and agri-products. This clearly shows that India can successfully negotiate and come to an agreement that is mutually beneficial. It is a good precursor to our negotiations with the European Union (EU), and also a pointer to the US for not pushing India too far under the pretext of buying Russian oil.

India-UK bilateral trade in goods ($23 billion) and services ($33 billion) stands at $56 billion. Under CETA, both sides have set an ambitious goal to double this and reach $120 billion by 2030. In 2024, the UK imported $12.9 billion goods (1.5% of its goods imports) and $19.8 billion (4.6%) in services (2023) from India. India imported goods worth $8.4 billion and services worth $13 billion from the UK. So, overall, India enjoys a surplus in both goods and services. But the trade potential is much more on both sides.